By Timothy G. Kenneally, Esquire
A business owner from Texas, we’ll call him George, posed this question, “Why is a Texas-based business required to provide a 30-minute meal break to certain company employees working shifts of more than 6 hours in Massachusetts, when no such breaks are required in the company’s home state of Texas?” The response to this inquiry seemed clear – Massachusetts wage and hour laws apply to employees working in Massachusetts. However, George pressed on, “I looked at the Fair Labor Standards Act (FLSA), he said, and it does not require a meal break. Why doesn’t the federal law trump Massachusetts?” The answer – many states throughout the country have state specific wage and hour laws in place. When state and federal laws address the same topic, the law that provides the greater benefit to the employee prevails.
Just this week, we saw an example of an important United States Supreme Court (Supreme Court) decision that will impact thousands of automobile dealerships in states across the country, and yet that decision will not change anything in Massachusetts.
The Supreme Court’s April 2, 2018 decision in Encino Motorcars, LLC v Navarro, et al. was heard loud and clear over the din of service departments in automobile dealerships throughout the United States. The issue: whether Encino Motorcars violated the FLSA by failing to pay overtime wages to service advisors who regularly worked more than forty (40) hours in a week. The answer: NO.
Encino Motorcars claimed that its service advisors were exempt from the FLSA’s overtime-pay requirement under 29 U. S. C. §213(b)(10)(A), which states : “[A]ny salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles, trucks, or farm implements, if he is employed by a nonmanufacturing establishment primarily engaged in the business of selling such vehicles or implements to ultimate purchasers” is exempt from the overtime wages requirement of the law (the 10A exemption). The Court of Appeals for the Ninth Circuit had ruled that the 10A exemption did not apply to service advisors who did not perform any work on the vehicles for the dealership, and that the service advisors were entitled to overtime. Following a close vote (5-4), the Supreme Court overruled that decision reasoning:
[S]ervice advisors are ‘salesm[e]n . . . primarily engaged in . . . servicing automobiles,’ [and are therefore] exempt from the FLSA’s overtime-pay requirement…Service advisors are also ‘primarily engaged in . . . servicing automobiles.’ ‘Servicing’ can mean either ‘the action of maintaining or repairing a motor vehicle’ or ‘[t]he action of providing a service.’ Service advisors satisfy both definitions because they are integral to the servicing process.
Of import, the impact of the Supreme Court’s decision is limited to the FLSA, which is the federal wage and hour law. For those jurisdictions with state overtime laws that do not adopt or mirror the FLSA, employees may remain eligible for overtime even where they are exempt under the FLSA. In jurisdictions that do not include the 10A exemption (or similar language) within their overtime law, for example Massachusetts, service advisors remain eligible for overtime compensation under state wage and hour laws.
State wage and hour laws and exempt classification do not always follow federal law, and can result in costly damages in the event of an audit or lawsuit. We recommend that employers review their employee job descriptions and applicable law to determine whether their employees are properly classified.
Our recent blog entry regarding the new PAID law (https://conta.cc/2GO4VPN) presents another example of a federal regulation that employers would be wise to know and understand, while also comparing that law to the laws of their state. Please also check out www.foleylawpractice.com for more information on the services we provide. We are here to help.